Cruise Company Produces a Part That Is Used in the Manufacture

question 242

Multiple Choice

Cruise Company produces a part that is used in the manufacture of one of its products.The unit
Manufacturing costs of this part,assuming a production level of 6,000 units,are as follows:

Suri Company has offered to sell 6,000 units of the same part to Cruise Company for $14 per unit.Assuming the company has no other use for its facilities,what should Cruise Company do?

• A)Make the part and save $3 per unit.
• B)Make the part and save $6 per unit.
• C)Buy from Suri and save $2 per unit.
• D)Make the part and save $10 per unit.

---

Definitions:

Accounts Payable

The amount of money a company owes to its suppliers or creditors for goods or services purchased on credit.

Budgeted Purchases

Projected expenditures for goods or services during the budget period, often used in planning an organization's operations.

Budgeted Sales

The anticipated revenue from goods or services a company plans to sell over a certain period, based on forecasts.

Direct Materials Budget

A financial plan that estimates the raw materials required for production and the cost associated with these materials for a specific period.